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The Fabric of Society:

Unravelling the Economics of Fashion
Matty Agrawal
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What distinguishes a prince from a pauper? Or a socialite from a secretary? One could argue it’s just a matter of fine tailored clothes. Or at least, that was once the case. Now, the upper echelons of society are often seen donning a plain t-shirt and jeans (see the tech giants) or athleisure (see celebrities in sweats and models in ‘dad shoes’). This ostensibly humble attire, however, is anything but – it is likely those were triple-digit shoes and the t-shirt was the same price as a mid-range smartphone. The growing trend of ‘quiet luxury’ further encapsulates a cultural shift away from conspicuous extravagance towards distinction through price alone.


As Thorstein Veblen pointed out, luxury clothes serve to separate the societal elite from the hoi polloi, while simultaneously imparting a facade of effortlessness. In the realm of economics, fashion is often dismissed as a capricious and decadent folly, but it provides a valuable insight to the idiosyncratic demands of luxury goods. Fashion trend cycles are inextricably linked to, and indicative of, shifts in the cultural and political landscape. This is key to understanding the $1.7 trillion industry, which is arousing increasing controversy for its impact on the environment – estimated to account for up to 8% of global greenhouse gas emissions.


 A Tailor as Old as Time

Most of the clothing an average person comes across in everyday life belongs to the ‘ready-to-wear’ category, as opposed to haute couture which refers to custom-fitted high fashion. The popularisation of the latter is often credited to Rose Bertin, Marie Antoinnette’s dressmaker, also considered the first fashion designer. The queen’s sartorial decisions were a matter of national concern. Her casual dresses of muslin caused outrage for promoting fashion using imported fabric during a time of economic precarity, as well as instigating accusations of insensitivity as Antoinnette appeared to be pretending to be a commoner for entertainment.


The first haute couture house was established in Paris in 1858, by Charles Frederick Worth, and from then on, Parisian fashion segued into La Belle Epoque. This was a period of political stability and economic prosperity that saw a flourishing culture and the commercialisation of fashion, with the first fashion shows and dresses for the masses.


With the advent of the First World War, fashion took a turn towards practicality, with women surging into the labour market and suddenly requiring clothes better suited to physical activity. In the interwar period, women’s fashion saw a dramatic departure from the previously restrictive and demure style, with hair and hemlines getting shorter – seen in the rise of the flapper style.


With the 70’s began the era of the ‘supermodel’, culminating in the ‘Big Six’ ruling the 90’s – before trends shifted away from glamour towards the infamous ‘heroic chic’ look and back again but with the limelight now on actresses and pop stars.


The New and the Nostalgic

Today, the roar of the fashion industry has never been louder, with the lifespan of trends seemingly falling from a decade to a month at most. It seems as though we have never wanted more for less. The evolution of ‘fast fashion’ signifies this – churning out cheap ‘trendy’ clothing at breakneck speed. Technological progress seems to be geared primarily towards cutting costs and corners, rather than improving quality – to the point where even a ‘100% cotton’ tag doesn’t provide the quality assurance it once did. 


Increasing consumerism is fuelled with marketing and social media shaping consumer demands unlike anything before. This can be seen in the growing phenomenon of commodification of identity on platforms such as TikTok, with personalities being categorised into different ‘aesthetics’ – all with a particular style of clothing, accessories, makeup and the like. This contributes to the increasing ephemerality of fashion and, by peddling the link between consumption and character, it exacerbates consumerist culture. 


The sheer volume of demand has even been tempting high fashion brands to expand their consumer base – see the (almost oxymoronic) Mugler x H&M collaboration – blurring the lines between haute couture and ready-to-wear brands.


Ironically, nostalgia seems to define the current zeitgeist, with recent trends reviving 70’s/80’s/90’s and early 2000’s fashion, and even a comeback of the corset. Further, there is a rise in popularity of vintage clothing and thrift shops – which can be attributed partly to an increasing desire for sustainability, but perhaps, also as a response to the noticeable decline in quality of modern clothing. It has been argued that a fashionable article not only serves as evidence that (oftentimes significant) labour has been expended, but that it has been expended recently – thereby incorporating the preference of recent fashions into the demand function. However, recently this seems to have been subverted, with clothes of the past being preferred for their comparatively high quality and durability – although the exact era of the past being preferred is still influenced by what is currently ‘trending’. 


Demands have responded to the extreme supply-side changes in the industry, with increased consciousness towards sustainable and ethical practices as well as brands’ diversity, equity and inclusion. However, with public opinion turning on the use of materials such as leather, the fashion industry has taken this as an opportunity to greenwash the use of plastic by pushing ostensibly environmentally-friendly alternatives like ‘vegan leather’. The Higg Index – a sustainability rating standard used by numerous fashion giants – has also come under scrutiny for favouring the use of synthetic materials due to potentially dubious data and a board comprising various fast fashion brands benefitting from the stamp of approval it conveniently provides them (ibid).


Society, Status, and Struggle

It is interesting to consider the perpetual state of conflict between the characteristics that shape the demands of a luxury good and the producer’s quest to exploit said demands. Robinson (1961) argues that technological progress in the production of luxury goods erodes their value by depriving them of their exclusiveness, as rarity is considered the necessary condition for a luxury good. The essence of fashion is predicated on the participation of a small elite, and is lost as soon as it is communicated to those outside the group being emulated. It is likened to the development of synthetic diamonds initially increasing absolute revenue, but ultimately causing a decline when the illusion of its former scarcity wears off (ibid).


This cat-and-mouse game seems inherently unsustainable, and looks to have now reached a crescendo. As technological progress allows the factors of production to get increasingly mobile, the lag between the emergence of a fashion and its percolation through the social hierarchy has dramatically fallen. What this spells for the future of fashion is difficult to predict. The socially emulative and competitive propensities of demand are seldom seen as evidently as in the arena of fashion. The indefatigable pursuit of differentiation by the social elite and of emulation by the rest seems to be heading quite rapidly into an Emperor's New Clothes-esque situation – which ultimately goes to show that despite the vast transformations, human nature has not changed much at all.  

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